Hancock wins WGO, page-193

Investment is essentially an exercise of ourselves versus the market. We buy because we think the market has priced an equity too cheap, and vice versa, sell when we think the market has priced something too high. When the market moves against us (the individual investor), it's either the market wrong or us that has gotten their valuations wrong.

Normally, valuation is a fine delicate (and subjective) art of combining a good working model coupled with sound assumptions, risk tolerances and half-decent assumptions about the current asset/liabilities as well as future cashflow. In this instance, the sale of NWE and, in particular, WGO has given us more than we need in terms of the actual market valuation for our asset.

Assuming the worst case scenario whereby none of our 3P or 2C actually converts to 2P, our 2P reserves is c.58.5 mmBOe (350PJ + 0.3mm barrel of condensate). At 2/GJ or 12.70/BOe, our 2P should be valued at 744mn. Add in net cash position of 115mn (157mn cash minus 42mn debt), we should be valued at a minimum of 859mn, or 33.7cps. This number is based purely on independently certified 2P reserves as of today, with the assumption that there is no more commercial gas to be found within all our PB acreages (inc EP469, EP503, EP504, Walyering, Ocean Hill, etc), nor any value attributed to the imminent cashflow from Walyering (producing asset is always worth more due to current high discount rate of capital).

Given this, I have been adding quite a substantial amount to my holding and taking on the market. Time will tell who's right

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